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The Trump Congress's tax reform

Post 1

paulh, vaccinated against the Omigod Variant

Now that the immense and complicated tax reform measure has reached the president's desk and been signed into law, I'd like to comment on a few of its provisions, being careful to qualify my conclusions with the caveat that it's pretty hard to get hard data from the press reports, let alone the love-Trump/hate-Trump members of Congress, who were asked to vote without much time or information on which to base their decisions.

The people in my family are apt to be just as divided among themselves as the rest of the country. When I try to be helpful and point out that Senator McCain had complained about Congress not working together on a bipartisan plan, my brother-in-law would not hear anything good said about McCain because of his past positions on other things. Whatever.

The Boston Globe, which is definitely not going to go out of its way to see anything good come out of the republican-controlled Congress, has made dire predictions about the public rising up because of the bill's cutting of tax exemptions for state taxes and mortgage payments. Yes, these parts of the plan would be devastating if they affected everyone, but they don't. Apparently, the first $10,000 in state taxes that you pay is still exempt. The mortgage provisions exempt the first $100,000 of your mortgage. I grant you that hardly any $100,000 mortgages are taken out these days, with the average house going for upwards of $350,000 in most areas. But let's not overlook the fact that, depending on the provisions of whichever state you live in, you'll have to have a pretty a fairly high income [$70,000? $100,000? $150,000? who knows?] before you have to pay a dime extra. Your $10,000 exemption will cover most people.

So, is this a rich man's measure? Hardly. The top 1% may not even notice enough increase in their taxes to care much about it, because their top tax rate is going to be done 1 and 1/2%. The mortgage provisions will affect most people, and yet it's unwise to conclude that people won't find ways to work around this. The bill is pretty recent. People are adaptable. The Globe's minions may be somewhat right, but let's check back on this in a couple of years to see how well the dust has settled.

But let's consider the reduction of the corporate income tax to 20% from more than 30%. Not all business owners are fat cats. There are maybe ten million "companies" in the U.S. These encompass the big, the small, the in-between, the well-managed, the appallingly managed, the growing, and the shrinking. If a company is doing well, maybe it doesn't need the extra help, but if losing a third of one's tax burden helps a shaky company keep going, is that so bad?

And what will those hurt by the loss of deductions do anyway? Republicans are famous for having a soft spot for the well to do. Democrats, on the other hand, aren't likely to feel much sympathy. "You're fat cats, so you deserve to pay more taxes," they will argue.

I will be back later with more analysis as I learn more about these issues.


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